If you are stuck in such a situation, here is what to do.

Mr. Rohan Sharma, a young student from Navipur, faced a perplexing issue with his bank. When he turned 18, he visited his local branch of Apex Commercial Bank to upgrade his minor savings account to a major one. Upon doing so, the bank imposed a new rule requiring a minimum average balance of Rs. 2,000. As a student with irregular income, Rohan found it difficult to maintain this balance. Consequently, the bank began levying non-maintenance charges, which eventually depleted his entire account balance to zero.

A couple of years later, Rohan decided to formally close the account to avoid any future complications. When he approached the bank, he was shocked to be informed that he had to pay a penalty of nearly Rs. 5,000 for not maintaining the minimum balance before they would process the closure. Rohan rightly argued that according to RBI guidelines, charges cannot make an account balance negative. In response, a bank official casually told him to simply stop using the account and it would close automatically after some time, but refused to provide any written confirmation of this. Worried about potential future liabilities and the bank’s refusal to provide a proper closure, Rohan is now unsure of his next steps.

Advice in such cases

• Review the Terms and Conditions: Carefully read the account opening form and the terms and conditions you agreed to. The bank’s policies regarding minimum balance, charges, and account closure procedures should be detailed there.
• Formal Written Complaint: Do not rely on oral conversations. Submit a formal, written complaint to the Branch Manager of the bank. Clearly state the issue, your request for account closure without unfair penalties, and reference the RBI’s guidelines. Ensure you get a stamped and dated acknowledgment of your letter.
• Escalate the Complaint: If you do not receive a satisfactory response from the branch within a reasonable time (e.g., 30 days), escalate the matter to the bank’s designated Nodal Officer for grievance redressal. The details of the Nodal Officer are usually available on the bank’s official website.
• Approach the Banking Ombudsman: If the bank fails to resolve your complaint, you can file a complaint with the Reserve Bank of India’s Banking Ombudsman. This is a free and effective mechanism for resolving disputes with banks.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

This situation is primarily governed by regulatory guidelines and consumer protection laws rather than criminal statutes.

• Reserve Bank of India (RBI) Guidelines: The RBI has issued specific circulars concerning charges for non-maintenance of minimum balance in savings accounts. Key points from these guidelines state that banks can levy charges but only to the extent that the account balance is not pushed into a negative value. If an account balance becomes zero, no further charges can be applied.
• Consumer Protection Act, 2019: Refusing to close an account or demanding unfair penalties can be considered a “deficiency in service” and an “unfair trade practice” under this Act. A consumer can file a complaint in the appropriate Consumer Disputes Redressal Commission (Consumer Court) seeking relief, which may include directions to the bank to close the account and compensation for the harassment caused.

If you are the complainant

• Gather all your documents, including the account opening form, bank statements showing the deductions, passbook, and any correspondence with the bank.
• Keep a detailed record of every interaction with the bank, including the date, time, name, and designation of the official you spoke with, and what was discussed.
• Send all communications to the bank in writing, preferably through registered post with acknowledgment due, or via email, to create a paper trail.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

• Do not be intimidated by the bank’s demands for penalties that are not in line with RBI regulations. Stand firm on your rights as a customer.
• Clearly and politely state your knowledge of the RBI rules that prevent banks from making an account balance negative due to penalties.
• Insist on a formal closure and a “No Dues Certificate” from the bank once the matter is settled. Do not accept vague verbal assurances.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

The police have a very limited role in such matters. This is considered a civil dispute between a service provider (the bank) and a customer. The police will not register an FIR for demands of bank penalties. They will almost certainly advise you to approach the bank’s internal grievance mechanism, the Banking Ombudsman, or a Consumer Court. Police intervention would only be warranted if there were elements of a criminal offense, such as forgery, fraud (like cheating under Section 318 of the Bharatiya Nyaya Sanhita, 2023), or criminal intimidation involving threats to life or property, which is highly unlikely in such a scenario.

FAQs people normally have

• Can a bank make my account balance negative by levying charges?
  No. As per clear RBI guidelines, charges for non-maintenance of minimum balance can only be levied until the account balance reaches zero. They cannot make the balance negative.
• Can a bank refuse to close my account if I don’t pay the penalty?
  A bank cannot refuse to close an account based on unfair penalties. They must provide a closure facility. If they insist on a penalty that violates RBI rules, you should escalate the complaint.
• Will this issue affect my credit score (e.g., CIBIL)?
  Generally, savings account maintenance issues do not directly impact your credit score, which is related to loans and credit cards. However, if the bank wrongly reports the penalty as a “default,” it could potentially cause issues. It is best to resolve the matter formally.
• Is it okay to just abandon the account as the bank suggested?
  No, this is bad advice. An abandoned account can lead to complications later. Always insist on a formal closure process and obtain a closure confirmation or a “No Dues Certificate.”

What evidence is required?

• Account statements that clearly show the charges being levied for non-maintenance of balance.
• A copy of the account opening form or kit that contains the terms and conditions.
• Any written communication, including letters or emails, exchanged with the bank regarding the issue.
• A copy of the written complaint submitted to the Branch Manager and other bank officials.
• Proof of dispatch for any letters sent (e.g., registered post receipt).

How long will the investigation take?

• Bank’s Internal Grievance Redressal: Banks are typically required to resolve complaints within 30 days.
• Banking Ombudsman: The process can take anywhere from 4 to 12 weeks, depending on the complexity of the case and the bank’s cooperation.
• Consumer Court: Filing a case in a consumer court is a more formal legal process and can take several months to over a year to reach a final decision.

Advocate Sudhir Rao, Supreme Court of India